Employment Law Cases

Pimlico Plumbers v Smith

A plumber engaged by a London firm, Pimlico Plumbers and described as ‘self-employed’ was in fact a ‘worker’ says the Court of Appeal, upholding the original judgment of the employment tribunal.

The plumber, Mr Smith, was obliged to provide his services personally but he didn’t have an unfettered right to provide a substitute to carry out the work if he was unable to do so. Therefore he could not be said to be genuinely ‘self-employed’.

Mr Smith worked as a plumber for Pimlico for six years. He had to wear Pimlico uniform, drive vans with the Pimlico logo and could only be contacted by customers through Pimlico. Contracts and estimates were issued in the name of Pimlico and payment was made to Pimlico. The movements of the plumbers were monitored via a GPS system on their vans. When he parted company with Pimlico he claimed that he’d been unfairly dismissed and discriminated against and that he was owed holiday pay.

At a preliminary hearing a tribunal held that Mr Smith was not an employee, so did not qualify for protection against unfair dismissal. He was, however, found to be a ‘worker’ and entitled to holiday pay and protection against discrimination. The EAT upheld those decisions in 2015.

Pimlico appealed the finding that Mr Smith was a worker. The Court of Appeal looked at whether Mr Smith had an obligation to provide work personally and if so, was he working for himself and providing services to Pimlico as a client or customer or was he providing those services on behalf of Pimlico? There was nothing in the agreement that expressly allowed Mr Smith to substitute another plumber if he was busy elsewhere. The contract could not be interpreted, as Pimlico argued, to mean that he could have hired someone else to do the job. Although he was, on the face of it, entitled to provide his services to others he never did so, and the Court of Appeal found that he would have had difficulty in contacting any customers outside the hours when he worked for Pimlico and would not have been able to use his van.

Neither was Pimlico’s argument that it was the client or customer of Mr Smith upheld. The following factors were crucial: the high degree of control exercised by Pimlico over Mr Smith; the stringent restrictive covenants in the contracts which sought to prevent him working for any other plumber in the Greater London area for three months post-termination; and the tribunal’s finding that Mr Smith was contractually obliged to work at least 40 hours per week.

Taken as a whole, the Court of Appeal could find no fault with the tribunal’s finding that Mr Smith was a worker - he was an integral part of Pimlico’s business, providing services on behalf of Pimlico rather than to them as a client or customer. They did not have to consider whether Mr Smith was an employee as this was not part of the appeal. The tribunal had decided that he was not an employee and this had been upheld by the EAT. This was because there was insufficient obligation to provide work or pay for it, Mr Smith and Pimlico both regarded him as self-employed for the whole contract, Mr Smith was registered for VAT, took advantage of a 20% mark up on materials only available to the self-employed and bore the financial risk on not getting paid, the job taking longer.

Link to judgment: http://www.bailii.org/ew/cases/EWCA/Civ/2017/51.html

Comment

A worker is a hybrid category which sits between an employee and those who are ‘truly’ self-employed and have no rights. The key question for the employment tribunal is whether the self-employed person is carrying on a profession or a business undertaking for them or whether they are self-employed and provide their services for someone else. This second category is a ‘worker’ and entitled to be enrolled in a pension scheme, protection from discrimination and whistleblowing, entitlement to a minimum wage, to claim paid holiday and rest breaks. However, it is important to remember that this case and every other case on employment status is decided on its facts and does not set a general precedent.

Only an employee can claim unfair dismissal, redundancy payments, maternity/adoption/paternity leave or be entitled to statutory sick pay.

It is a very complicated area and understandably difficult for business to understand. The government has already commissioned a review into workers’ rights in the gig economy.

This is a good comment piece from barrister Darren Newman on the current state of the law on employment status.